Is my contractor actually licensed, bonded and insured?

Published: 04th July 2009
Views: N/A

Tips on how to safely pick a good contractor for your home improvement project or repair work. Almost every form of advertising from a contractor, whether it be simply their vehicle signage or in phone book advertising, you will repeatedly see the phrase "Licensed, Bonded and Insured". Do you as a consumer actually know what each of these words mean and how they can affect you? You BETTER! Well, let me explain it to you! I know these terms well - and pay dearly for them. Much of my competition exploits these terms, or rather fraudulently use them. This bothers me since I run a legitimate business and am actually LICENSED, BONDED and INSURED - these words- come at a substantial cost to those of us who run legitimate businesses and actually meet the requirements to take good care of our customers. This article is slanted towards plumbing, since I am in the plumbing business and fully understand plumbing contracting - but is relevant to ALL other forms of contracting. FIRST- Being Licensed can mean many, many, things. So, if your plumber says that he is licensed what exactly does he mean? Does he mean that he has a DRIVERS LICENSE - HA :-)!! Does he mean that he has a STATE ISSUED PLUMBING LICENSE, or a local business license, or BOTH? Well, if he is legitimate he will certainly have a STATE ISSUED MASTER PLUMBER and/or MASTER GAS FITTER license.

He will also have a local business license and perhaps multiple business licenses for each municipality that his company services. He should be able to produce these items for you upon request - if he actually has them. You can also call or go online your State Plumbing and Gas fitters Board to check the status of your plumber without them ever knowing! Also, call your municipality (City / County) to check their business license status. SECOND - Bonded - what does that mean? Well there are many types and forms of Bonds and Bonding. For, instance in my service area, which covers approximately 15 different municipalities, I am only required by two of those municipalities to actually have a bond on file with the jurisdiction (city / county). Here is the real KICKER - the bond required for the year is only for $ $10,000.00! If a customer had a problem and had to challenge my company or the city on a job that was messed up they could could only claim up to $10,000.00 of damages (the amount of the bond on file). That naturally will not cover much in damages. Remember that I am not required by the rest of my service area to be bonded. If there were to be a problem then the customer (you) would have to HOPE that I am a decent human-being an honest businessman and will honor my warranty. If I do not choose to honor my warranty - then what will you do? Well, you will have to hire an attorney and sue me for damages! This is a long drawn out process and sometimes is not worth the trouble. Lets assume, though, that you do sue and win -- If your contractor is an INCORPORATION or an LLC then he could simply close the company. The reason that I am telling you this is that YOU SHOULD USE A GOOD, ESTABLISHED COMPANY and be willing to pay just a bit more for their services! You will save in the long run. THIRD - Insured - the proper type of insurance and the policy amount is very important . Sometimes the only thing that is insured is the vehicle and it is not even on a COMMERCIAL POLICY. A lot of good that will do if there is a problem with the work, your house floods out or burns to the ground! The proper insurance you should be looking for is called GENERAL LIABILITY INSURANCE - preferably with a WORKERS COMPENSATION

policy. General Liability Ins. should be a policy with a MINIMUM of at least $1million dollars with an umbrella (excess coverage per incident) of at least the policy minimum( $1MILL in this case) or in most cases double the base policy coverage. Having this insurance is EXPENSIVE and many contractors do not have it. They manage to skate by never being caught or even asked about it. You as the consumer should only deal with contractors with the above mentioned qualifications. A contractor who meets these qualifications will probably take good care you - it is in their best interest to keep you happy. Thank you for taking time to read this article, hopefully it will be of help to someone!


The author Wes Hamilton is Owner and President of Plumb Pro, Inc a full service plumbing company in Alabama. Please visit our website for more free information and pictures

More to Explore